Class Actions in Canada

Thursday, February 15, 2007

February 2007

OSGOODE CLASS ACTION CONFERENCECanada's pre-eminent class action conference will be held in Toronto on April 26-27, 2006. See the link below for details on registration. Once again, we have a fantastic panel of speakers. This conference has the best national breadth, so it is a great one for lawyers from outside Hogtown. The speakers include the leading class action judges from across the country. And the networking/socializing is always a blast, as reflected in the fact that all of my associates are clamouring to attend. We'll be drawing straws to determine the poor sucker is who has to stay in the office. (I expect we'll now be inundated with urgent motions as my opponents realize how short-staffed we'll be!)https://osgoode.yorku.ca/pdpwebsite.nsf/00580069eadebe7e85256a3f005763d1/dc971d23ef4f8c488525726c00751e16!OpenDocument&Date=2007-04-26

PUBLIC TRUSTEE GIVEN LIMITED STANDING IN CLASS PROCEEDINGRichard v. British Columbia: 2006 BCSC 1942: An application was brought by the Public Guardian and Trustee for rights of participation in this certified class action brought on behalf of residents of the Woodlands psychiatric facility. The court granted the right to receive copies of pleadings, and limited participation in discoveries, but declined to give the PGT the right to participate in settlement discussions. The writer is co-counsel for the Province in this matter.

WCB INTEREST CASE (NEARLY) CERTIFIEDJohnson v. British Columbia (Workers' Compensation Board), 2007 BCJ 31: WCB paid Mr. Johnson about $19,000 in retroactive wage loss benefits, but did not pay him any interest. The Plaintiff sought judicial review, and sought to have that judicial review certified as a class action. The court considered the defendant's alternatives of a "test case" or individual judicial review, and rejected them stating: "The main advantage to Mr. Johnson of a certification order regarding his JRPA proceeding relates to legal costs. If Mr. Johnson's claim succeeds as a class JRPA, the appropriate legal fee for his lawyer should reflect to some extent the number of people affected. As a result, a lawyer would likely be willing to pursue this relatively minor claim which may benefit a large class, while be unwilling to act in exchange for a fee which takes into account only the impact on Mr. Johnson. Thus, Mr. Johnson is likely to obtain legal counsel if the claim is certified even though the claim is uneconomic on an individual basis. In contrast, Mr. Johnson's claim is unlikely to proceed as a test case because it would be uneconomic for him to pursue it."The court asked for further submissions in relation to class definition and the case management plan prior to issuing a final certification order. The court also suggested that the parties could consider arguing the merits prior to finalization of the certification order.CRIMINAL INTEREST RATE CASE DISMISSEDScarlett v. FortisBC Inc, 2007 BCJ 54: The court found that the case should be dismissed because it did not involve an "advance of credit". Rather than charge a "late payment penalty", the utility was granting an "early payment discount". The court stated: "Since the defendant only allowed the discount on payments made before the due date, and since credit can arise only after payment is due, it follows that the discount cannot be associated with an advance of credit. "

CHICKEN AND EGGS IN BCBirrell v. Providence Health Care Society, 2006 BCJ 3162: The plaintiff wanted to bring a motion to substitute in a new rep plaintiff, as it learned after the action was commenced that the plaintiff likely had no cause of action. The defendant wanted to bring an summary judgment motion relying on the ultimate limitation period. The plaintiff argued that both motions should be heard with certification.The court first expressed some concern about limitation periods, specifically that the limitation period might not be stayed if the case was dismissed prior to the certification hearing. The court stated:"The explanatory notes accompanying the first reading of Bill 64, Justice Modernization Statutes Amendment Act, 5th Sess., 37th Parl., British Columbia, 2004, explain that section 38.1 "suspends the running of a limitation period applicable to a cause of action if that cause of action could have been dealt with in a proceeding and that proceeding could have been, but was not, certified as a class proceeding." Although this suggests that the suspension of the limitation period would apply if a proceeding is dismissed prior to the certification hearing, the statutory language is narrower than the language used in other legislation. The class proceedings legislation in several other provinces suspends the limitation period where a cause of action is asserted in a class proceeding, whether or not that proceeding is certified, if it is reasonable for a person to assume that he or she was a class member for the purposes of that action (see S.A. 2003, c. C-16.5, s. 40; S.S. 2001, c. 12.01, s. 43; C.C.S.M. c. C130, s. 39; S.O. 1992, c. 6, s. 28; S.N.L. 2001, c. 18.1, s. 39). By including two additional limitations in section 38.1: first, in subparagraph (a) that an application be made for an order certifying a proceeding as a class proceeding; and second, in subparagraph (c) that a court must make a certain order before the limitation period will be suspended, the legislature presumably intended that the mere commencement of a proceeding under the Class Proceedings Act would not suffice to suspend the limitation periods. I therefore conclude that in this instance, it cannot be said with certainty that section 38.1 of the Class Proceedings Act would operate to suspend the limitation period for other potential plaintiffs in this action."The court went on to order that the substitution motion and motion to dismiss should proceed in advance of certification in light of the increased cost that would be incurred trying all matters together. Having the substitution motion considered early would help manage any limitation period concerns that created by the risk of the action being dismissed prior to certification against the flawed plaintiff. It would also be useful to clarify the application of the ultimate limitation period issue prior to certification in terms of formulating a class definition at the certification hearing.

CLASS CLAIM DISMISSED ON MERITSReid v. British Columbia (Egg Marketing Board), 2007 BCJ 197: The court found that the plaintiff class had not made out their case of misfeasance in public office.

SCC LEAVE APPLICATIONS DISMISSEDSmith v. Canada, 2006 SCCA 298: This tax treatment of truckers case had been dismissed at every level. The case had not yet been certified.Roitman v. Canada, 2006 SCCA 353: This tax case had been thrown out by the Federal Court of Appeal. The case had not yet been certified.

ONE BC PENSION CERTIFICATION UPHELD ON APPEAL, ANOTHER OTHER DISMISSEDBennett v. BC, 2007 BCJ 7: The court found that the nature of the case was such that it did not have to be determined by a labour arbitrator.Williams v. College Pension Board 2007 BCCA 19: The court overturned certification of this case given that there was no possible valid damages claim. Any finding that the board had breached their fiduciary duty would, as a matter of statute, invalidate any decision. As such, there would be no need to claim for damages flowing from that decision. As the plaintiff was only seeking damages, the case was dismissed.

CLASS OBTAINS SUMMARY JUDGEMENTMillard v. North George Capital Management Ltd., 2006 OJ 4902: The plaintiffs' motion for summary judgment for fraud or fraudulent misrepresentation against the personal defendant in this class action was granted. The defendant was the directing mind of corporations involved in an alleged "ponzi scheme".

DISMISSAL OF EMPLOYMENT CLASS ACTION UPHELDLachance v. Cleyn & Tinkler inc., 2006 QJ 13366: See our July 2006 blog entry for the report on the original case. The Court of Appeal did not provide detailed reasons in affirming the decision to decline certification.

DEFENDANT ORDERED TO REPORT ON ITS IMPLEMENTATION OF SETTLEMENTChartier v. Meubles Leon Ltee, 2006 QJ 13495: This class action had been settled, and the plaintiff sought an order that the defendant report on its settlement administration efforts. The court granted the order. The court noted that prior to 2002, Quebec's legislation assumed that the court clerk would manage distribution of settlement funds. This did not prove to be practical, and the legislation was changed in 2002 to allow a third party to be appointed: Art 1033.1. Although there had been no formal appointment of the defendant in this case, the defendant had essentially taken on the role, and hence should be required to report. The court held that a report was essential to ensure that the notice was effective and the duties had been completed. The court stated that if the take-up rate was low, the court could order additional notice.

AGROPUR FALLOUTMarcotte v. Bank of Montreal, 2006 QJ 13744: Now that Quebec has adopted the "Ragoonanan principle" requiring a plaintiff for every defendant, one of the banks in this case applied to dismiss notwithstanding that the case had already been certified. The plaintiff proposed to simply add a new plaintiff that had dealt with that bank. The court allowed the addition of the new plaintiff noting that (1) the new plaintiff was already a member of the certified class, and (2) the class action was not expanded by the addition, (3) there was nothing unusual about two cases proceeding together, (4) the bank could apply for severance of the proceeding at a later date, (5) refusing the request and forcing the bank's customers to start over would only delay the proceeding, which was contrary to the purpose of class proceedings, (6) the bank had not opposed certification on this basis in the first instance.

WORLD'S LONGEST $500 CASE COMES TO AN ENDGarland v. Enbridge Gas Distribution, 2006 OJ 4907: This long running saga came to an end with the case (finally) being certified, for settlement purposes. The court had earlier indicated general agreement with the settlement terms, subject to a few specific concerns. These were addressed in this latest judgement. In particular, the court had been concerned about the fact that settlement appeared to be contingent on fee approval in the amount requested. The court held:"In an affidavit filed before the second hearing, Ms Dorothy Fong - one of the solicitors with the class counsel firms - stated that at no time did counsel insist that the condition I considered to be obnoxious was to be included in the settlement agreement. I must accept that clarification but it does not alter the fact that, in accepting the condition and insisting on it in this court, counsel were acting exclusively in their own interests at the expense of those of the class. I remain quite unconvinced by counsel's insistence that they had no option but to accept the mediator's recommendation in respect of their fees with the condition attached. The only interests affected were those of class counsel and the class, and neither the defendant, nor Mr Garland, could possibly have had any objection to the deletion of the condition in the interests of the class. The fact that the mediator's recommendation was made on a take-it-or-leave-it basis has no relevance. Settlements are made between the parties and a mediator's interests are not involved if a settlement is ultimately reached that, in some particulars, departs from the mediator's recommendations. Subject to my acceptance of Ms Fong's point of clarification, I adhere to the views expressed in the endorsement. The matter is now moot because, as a consequence of my decision after the first hearing, the minutes of settlement have been amended to provide that, if the fees are reduced by the court in an exercise of its discretion, and the settlement is otherwise approved, the settlement will be binding and the amount payable to the United Way will be increased to the extent of the fee reduction."The court had to consider a tortured history in relation to the status of the fee agreements with the representative plaintiff. The court considered the proper application of s.32(4) of the Ontario Act (the section allowing a court to apply its discretion where a fee agreement is not approved). The court stated:"It appears to be accepted that a motion can be made under section 32(4) even where the court has not been asked to approve a fee agreement: see, for example, Hislop v. Attorney General of Canada (2004) 3 C.P.C. (6th) 42 (S.C.J.). On this interpretation - which I believe I should accept and apply - the section would, to at least some extent, replace the common law and statutory rules governing solicitor and client costs in other proceedings with a general statutory discretion. Given the recognition of an inherent jurisdiction to approve a bonus in Desmoulin v. Blair (1994), 21 O.R. (3d) 217 (C.A.) and Walker v. Ritchie, [2006] S.C.J. No. 45, in cases where there is no fee agreement in existence, there may be no significant difference under either approach as to the powers of the court, and the facts that should influence its decision. Where, however, there is such an agreement the difference could be important if it is the client and not the solicitor who wishes to rely on the agreement. It has not, to my knowledge been held that - contrary to the provisions of section 21 of the Solicitors Act - the discretion under section 32(4) would permit the court to approve a fee in excess of that provided in such an agreement...In my opinion, it would be inconsistent with the grounds on which contingent fee agreements are justified to accept the possibility that, on a motion by counsel in circumstances such as these, the court may override their provisions without the consent of the representative party. At the very least, the existence of such an agreement must surely be a highly important factor to be considered in the exercise of the discretion conferred in section 32(4)...Mr. Garland supports the motion to approve the fees determined pursuant to the settlement, and has not resiled from his opinion that a fee calculated in accordance with the 1998 agreement would not provide counsel with fair and adequate compensation. In view of his position on the motion, I do not think I could properly hold counsel to the terms of the 1998 fee agreement. In these circumstances, it appears that, under the existing practice of the court - and whether or not approval of the 2006 agreement might be withheld in the light of the considerations I have mentioned - the ultimate question to be decided is whether the fee I am asked to approve exceeds an amount that would fairly and reasonably compensate counsel for the services they have provided to Mr. Garland and the class. Despite this, I have mentioned the above concerns because, in my judgment, the submissions made by class counsel at the first hearing, and those of Mr. Millar at the second, did not give sufficient recognition to the nature and extent of the conflicts of interest that inevitably arise - and the implications of counsel's fiduciary responsibilities - when they are seeking to reopen a binding fee agreement during the course of settlement discussions with another party. I refer to the comments of the Ontario Law Reform Commission in its Report on Class Actions (1982), at pages 729-731. The interests of the class must be paramount when counsel are engaged in negotiations to settle the issues with an opposing party. In my opinion, they should not permit their personal interests - and particularly those that are adverse to the interests of the class - to be involved in the negotiations. "On the amount of the fee, there was also some difficult issues, as class counsel was seeking $10 million of the $22 million payable under the settlement. However, the court noted that additional benefits could be attributed to class counsel's efforts, in particular the fact that the defendant had stopped charging the excess fee: "If the net savings to the class are added to the gross recovery under the settlement, the fee of $10, 130,469.20 requested would be approximately 26.7% of the resulting amount. On that basis - and even if I were to ignore the benefit to customers of Enbridge who were not members of the class - the fee is not excessive and will be approved. I would not have approved it if I had considered that the sole measure of the success achieved was the gross recovery of $22 million under the provisions of the settlement."There was also an interesting discussion regarding the payment of fees to the class representative:"My understanding of the analysis in those cases is that compensation is to be awarded only where the representative's contribution is greater than that which would normally be expected of a representative party in the circumstances of the case. Such a contribution must have related to functions necessary for the preparation or presentation of the case and have resulted in a direct financial benefit of the class. It will often be indicated - and, perhaps, usually - by an extraordinary commitment of time and effort, or the application of special expertise. It may also be relevant, I think, if the contribution is referable to the representative's obligation to fairly and adequately represent the class rather than, for example, to time spent considering and communicating with counsel with respect to the legal issues and tactics and strategies in the litigation. Finally, I note that each of the learned judges would attribute importance to the initiative shown by the representative party in connection with decisions to commence and continue the proceedings. All these factors, in my opinion, must be weighed in the light of the benefit that the class received from the representative's contribution.In the light of the above considerations, Mr Garland has, in my judgment, made out a strong case for compensation. He took the initiative in seeking legal advice with respect to the legality of late payment penalties and in instructing counsel to commence the proceedings. He was instrumental in keeping the legal team together when members of the class counsel sought to withdraw from the proceedings on the ground of a business conflict, and he accepted a large part of the responsibility for communicating with class members personally or through interviews with representatives of the media. He also played an active part in the settlement negotiations and, in particular, in obtaining agreement to the nature and details of the cy pres distribution - one of the matters for which he found it desirable to retain separate counsel. The litigation was commenced, and continued, by Mr Garland in the public interest and, I am satisfied, that throughout it his primary concern has been to protect and serve the interests of the class... His records - in the form of dockets - disclose that he has spent 1584 hours and incurred expenses of $464.93. ...He seeks $95,000 in compensation to be paid out of the amount I have approved as the fees of class counsel. Overall, I am satisfied that Mr Garland did contribute to the success of the proceeding to an extent that exceeded significantly what might properly have been expected of a representative plaintiff in the circumstances of this case. ....I believe that $25,000 is an amount that would represent fair and reasonable compensation for his exceptional contribution. ...In arriving at that result, I have not ignored the comments of Winkler J. with respect to the possible inconsistency between the concept of a cy pres distribution and an award of an amount of compensation to a representative plaintiff. I respectfully accept that the inconsistency - and an appearance of a conflict of interest - could arise if such compensation were to be awarded routinely. However, I do not think the problem arises here where the compensation is for the direct benefit Mr Garland has obtained for the class by his special contribution, and where I have approved, as fair and reasonable compensation to class counsel, the amount from which Mr Garland's compensation is to be paid."

VIOXX CERTIFICATION APPLICATION ADJOURNEDWuttunee v. Merck Frosst Canada Ltd. (Klebuc C.J.S. ) 2007 SKQB 29: On this certification motion, the court concluded:(1) all causes of action advanced against Merck were struck other than those available pursuant to ss. 4(i) and 48 of the Consumer Protection Act, ss. 36 and 52 of the Competition Act, and the torts of negligence, battery and deceit;(2) the application by Merck for a declaration that the Saskatchewan's Consumer Protection Act was unconstitutional was dismissed. The court stated: "nothing before the Court suggests that compliance with the CPA constitutes a defiance of the FDA. I am further satisfied that the FDA is permissive insofar as the marketing of Vioxx in [*114] the Province of Saskatchewan is concerned, and that it does not inhibit more exacting provincial requirements related to marketing prescription drugs." Further, in terms of the suggestion that the Competition Act "occupied the field" the court stated: "In my opinion, the limited extra-provincial effect of s. 29 of the CPA is "clearly incidental" to the dominant purpose of the CPA: the regulation of business in the province, a matter within the legislative competence of Saskatchewan."(3) the action against Canada was struck. The court stated: "In my view, the Minister in the instant case made, and was only required to make, policy decisions having regard to the public at large when it licensed Vioxx for use in Canada. In this respect, the licensing and related regulatory functions of Health Canada did not create any rights in favour of the plaintiffs or a direct relationship between Canada and the plaintiffs for the reasons canvassed in Cooper, supra and Edwards, supra. In the result, no private duty of care on the part of Canada exists upon which the plaintiffs' negligence claim can be sustained, unless Health Canada undertook or otherwise was obligated to undertake an operational duty";(4) The plaintiff's expert J.J.B. Pierre Blais was disqualified as an expert regarding pharmacological issues;(5) Given that the decision regarding available causes of action materially narrowed the nature of the case, significant amendments might be appropriate. Therefore, the court suggested that a further hearing be held during which the plaintiffs are to present revised identifiable classes, common issues and an action plan consistent with the causes of action that met the threshold test.Note that this case seeks certification of a national opt-in class, notwithstanding that there are actions ongoing in other jurisdictions. This issue was not considered, and counsel in the other actions were not present at the hearing.

INCONTENENCE PRODUCT ACTION DISMISSED AGAINST FEDSKlein v. American Medical Systems Inc., 2006 OJ 5181: The federal government appealed a decision refusing to toss this case on a summary basis. The Divisional Court overturned this finding stating: "recognizing of a duty of care would create a spectrum of unlimited liability to an unlimited class. At the time the device was available in Canada, it was not possible for Health Canada to control its manufacture or sale, and the spectrum of unlimited liability would therefore loom large. Second, recognizing of a duty of care would effectively create an insurance scheme for medical devices funded by taxpayers, which, according to the legislation, its content and emphasis, was not the intention of Parliament. Third, recognizing of a duty of care may have a negative impact on the government's ability to balance all relevant interests when making regulatory decisions regarding medical devices"If Wuttunee and Klein hold up, the Feds are going to be seeing far fewer class actions!

PREPULSID AND ZYPREXA CASES CERTIFIEDBoulanger v. Johnson & Johnson Corp. (Macdonald J.) [2007] O.J. No. 179: The court certified this Prepulsid case. There was an interesting discussion of whether products liability cases are always suitable for certification:"Before I summarize the parties' positions, I comment on a statement that appears in the opening paragraph of the plaintiff's factum. It is that this is a product liability case and as such "this is a quintessential case for certification, and follows directly in line with other certified drug and medical device cases in Canada". In response, the Ortho-Johnson defendants point out that simply because this case is a "product liability" case does not mean that it is automatically suited to certification. They further submit each case must be assessed contextually on it own facts. See para [104] of their factum. They refer to Ernewein v. General Motors of Canada Ltd., [2005] B.C.J. No. 2370 (C.A.) (QL), leave to appeal to the S.C.C. refused [2005] S.C.C.A. No. 545, wherein the following comments appear at para. 33:'Since earlier cases ... [references removed], experience has shown that not all product liability cases lend themselves to certification. In some, the complexities inherent in problems of proof of the applicable duty of care over a long period of time, changing manufacturing [*5] techniques, or multi-party involvement in the product delivery chain, have made the formulation of a common question problematic..[references removed]. In each instance, the question must be determined "contextually" - i.e., not on the basis of a blanket assumption regarding product liability cases but in light of all the evidence concerning the specific case before the court. ' I am mindful of the point made by the defendants. I agree with it. I do not approach the analysis of the legal issues raised in this motion on the basis that a so-called product liability case is automatically suited to certification."On class membership, the court adopted the proper objective analysis, notwithstanding that only limited number of persons in the class may have suffered adverse effects from the drug: "In my opinion, the proposed class satisfies s. 5(1)(b). As required by Robertson, supra, and Hollick, supra at para. 17, the class is defined by objective criteria and class membership can be determined without reference to the merits of the action. The class definition is tied to ingestion of Prepulsid, therefore class membership can be objectively determined through prescription and medical records. The defendants' primary complaint is that the proposed class is overly broad because it would include persons who do not have a claim against them. The representative plaintiff in reply asserts that it is incorrect in law to restrict the class to those who have sustained injury because this would improperly introduce a merits analysis to determining class membership. I agree...To my mind, it is a persuasive consideration that Health Canada ordered Prepulsid off the market. This is one of the factors that demonstrate a rational relationship between the proposed class and the common issues,"The court certified a generic causation question: "Whether Prepulsid causes adverse cardiac events". The court stated "The defendants attack proposed common issue (a) on two fronts. First, the defendants claim that the question of whether Prepulsid caused a number of cardiac events is not a common issue because the evidence shows that millions of people in the proposed class have not experienced these cardiac events and likely never will. Second, the defendants claim that the issue of causation will inevitably breakdown into a myriad of individual issues that will have to be examined separately... The representative plaintiff in her reply counters that issues of generic causation have been and continue to be certified in defective drug class actions. She claims that certifying this common issue will make it easier to address individual issues of proximate causation, allocation of fault and damages. It seems to me that matters of causation as framed by the defendants are more merits based rather than procedural. It is not the Court's task at this stage of the proceedings to make any ruling on the merits as to whether Prepulsid in fact causes adverse cardiac events..."The court also certified the issue of the liability to Ontario for subrogated medical benefits: "In my view, I am entitled to take judicial notice of the fact that the only available treatment for class members suffering Prepulsid cardiotoxicity is found in our publicly funded health care system. I have already concluded that there is sufficient evidence of Prepulsid cardiotoxicity and negligence on the part of the defendants to justify certifying these matters as common issues for trial. It logically follows, then, that there is sufficient evidence of prima facie liability on the part of the defendants for subrogated health care costs resulting from Prepulsid cardiotoxicity and the defendants' negligence. "

In Heward v. Elli Lilly, 2007 OJ 404 (Cullity J.), the court certified a Zyprexa class action. The court spoke to a number of important issues:Need to amend a statement of claim to conform to a new definition: "I do not think it is in the interests of a just, expeditious and inexpensive administration of justice to require that the statement of claim to be amended each time counsel is persuaded that changes to the class definition should be made" (para.11)The use of expert evidence: "All of this evidence is directly relevant to the merits of the litigation, and, of course, it is admissible on this motion - and has been considered - only to the limited extent that it may serve to rebut the plaintiffs' attempts to demonstrate the minimal basis of fact required to establish each of the requirements in section 5 (1)(b) through 5(1)(e) of the CPA. I have found it - and the evidence of Dr. Chue - helpful to the extent that it bears on the commonality, or lack of commonality, of the proposed common issues; the extent to which any issues that are common would advance the proceedings; the extent to which a class proceeding would be manageable and efficient; and, generally, whether such a proceeding would accord with, and advance, the objectives of the CPA and be preferable to other methods of resolving the plaintiffs' claims" (para.13)Waiver of tort: "[It] it is, I believe, implicit in the reasons of Epstein J. that, for the purposes of section 5(1)(a) and a claim based on waiver of tort, it is unnecessary on the present state of the authorities to plead that a loss was incurred." (para.29) "it is not plain and obvious that a claim based on waiver of tort must satisfy the three-part test for unjust enrichment. (para.38) "I am also far from satisfied that, for the purposes of this motion, I should conclude that the proposed classification [between anti enrichment and anti harm torts] is sound. My principal difficulty is that it is by no means clear to me how one is to determine whether the primary purpose of a tort that has resulted in the enrichment of a defendant requires it to be placed within one category or the other." The court did not follow Reid v. Ford (a case for which I take full responsibility), and allowed the waiver of tort plea to proceed even though there was only a negligence allegation.Unjust Enrichment: The court rejected this as a cause of action stating: "I believe it is clear that the above unresolved questions of theory and principle are not at all appropriate for decision on the basis of the pleading and in the context of a motion for certification of the proceeding where the role of the court is, essentially, to determine whether there are common issues of law or fact that should be tried. However, whichever of the two theories is correct, I am of the opinion that the statement of claim does not disclose a separate cause of action for unjust enrichment and so find. The contrary can only be correct if the narrower theory was coupled with the wider concept of a corresponding deprivation and I do not believe the two are compatible"Class Definition: The court allowed an objective but arguably overinclusive class definition stating: "Applying it to the circumstances of this case I do not believe the proposed class is over-inclusive. While, in order to establish liability for negligence, each class member will have to prove that a loss was suffered, the question whether this is necessary when waiver of tort is pleaded is one on which the learned commentators are divided. In the context of section 5(1)(a) I have referred to the views of Professor Lionel Smith in his article in the Canadian Bar review in which he repeatedly emphasised that proof of loss is unnecessary for wrong-based disgorgement remedies."Temporal Aspect of Class Definition: "Defendants' counsel submitted also that the class, as defined, was objectionable as, in the absence of temporal restrictions, it would remain open indefinitely. I accept that, as drafted, it is over-inclusive in this respect unless, as I would be inclined to do, the primary class is understood to refer only to those who had ingested Zyprexa before the commencement of the action on February 2, 2005. Alternatively, as plaintiff's counsel submitted at the hearing, the class definition could be amended so that the primary class would close on the date of any order certifying the proceeding. Either approach would be acceptable."Common issues: A general causation question was certified, inter alia. The court also certified the question of possible general restitution flowing from the waiver of tort pleading. The court would not certify the question as to whether the provincial health insurers could be paid on an aggregate basis, stating that this would depend on the result of individual lawsuits.

NORTEL SETTLEMENT APPROVED IN ONTARIO AND BCFrohlinger v. Nortel Networks Corp. (Winkler J.) [2007] O.J. No. 148: As part of a multibillion-dollar global settlement of actions against Nortel Networks Corp. and several of its directors, the Ontario court approved the settlement of the two class actions, as well as counsel fees of $5 million. The Ontario actions represented national classes, except for residents of British Columbia and Quebec. The settlement contains terms relating to direct compensation to class members as well as indirect benefits through the adoption of certain corporate governance changes.On June 22, the Ontario Superior Court had granted certification on consent, under the Class Proceedings Act, 1992, for the purposes of settlement.In his reasons on approval, Justice Winkler concluded, "Although the settlement discussions largely took place in the context of the U.S. actions, they were conducted by experienced counsel, who had undertaken extensive investigation into the claims, under the supervision of an experienced judge as a neutral third party. There can be no doubt that the result was achieved through arms length hard bargaining. The further steps required to obtain adoption of the bargained settlement in the Canadian class actions, with the concomitant due diligence conducted by Canadian class counsel, provides additional comfort to the court that the settlement represents a fair compromise."The court noted the fact that the US merits-based class definition would not be approved in Canada: "[A] proper class definition does not include only those persons whose claims will be successful. Rather, as the Chief Justice states in Hollick, the essence of a proper class definition goes to the "rational connection between the class as defined and the asserted common issues". It is neither express nor implied in that statement that a class member's "colourable" claim must be one that will ultimately be successful. Indeed, it is the purpose of a class action to resolve claims through the utilization of a common issue phase and an individual issue determination, if necessary...The fact that any person so described may not ultimately be successful in advancing a claim for damages does not preclude their inclusion in the class."On the difficulties with multi-jurisdictional proceedings, he stated: "The differences in the jurisprudence between the two countries highlights some of the potential difficulties that may arise in cross-border litigation, particularly in respect of class actions. Courts in both countries have thus far been adept and adaptable in developing ad hoc procedures to deal with these types of issues. Given the increasing trends toward globalization, it is likely that cross-border litigation will increase. The instant case is an example of this…. It would be useful if more formal protocols were developed to facilitate the courts and the parties in dealing with these types of cases."Counsel fees of $5 million were approved to be allocated between Rochon Genova LLP and Lerners LLP.The settlement was also approved in the parallel case B.C. case: Jeffery v. Nortel Networks Corp, 2007 BCSC 69.The motion has been argued in Quebec, but a decision is still pending.

PARKING CLASS ACTION CASE CERTIFIEDBarbour v. UBC, 2006 BCSC 1897: The court certified this action, but did strike the claim for misfeasance in public office (para.39) because of a lack of particularity of the "intention" element of the cause of action. In relation to UBC's arguments against certification: (1) the court noted that although UBC raised complexities, they had not filed a Statement of Defence raising those complexities (paras. 56-57), and (2) UBC proposed no realistic alternative to class litigation (para.72).

COSTS SETTLED IN DISMISSED CLASS PROCEEDINGEzer v. Yorkton Securities Inc., 2006 BCJ 3098: This proposed class action had been dismissed prior to certification based on a jurisdictional argument. Special costs were assessed in the amount of $60,625.

POINTS OF LAW DETERMINED PRIOR TO CERTIFICATION IN EMPLOYMENT CLASS ACTIONMacaraeg v. E Care Contact Centers Ltd., 2006 BCJ 3211: The Defendant brought a motion on two preliminary points of law, being:1. As a matter of law, were the minimum overtime pay requirements of the Employment Standards Act...implied terms of the contract of employment between E Care and its employee, Cori Macaraeg?2. Is Ms. Macaraeg entitled to bring a civil action to enforce her statutory right to overtime pay, or does the jurisdiction to determine such claims lie exclusively with the Director of Employment Standards under the enforcement mechanisms of the ESA?The court found in favour of the Plaintiff on both points.

PENSION CLASS ACTION REFUSED CERTIFICATIONMacDougall v. Ontario Northland Transportation Commission, 2006 OJ 5164: The court found that there were too many conflicts amongst the class. In particular, the representative plaintiffs had been on the board that made some of the challenged decisions. The court also found that an application to the Superintendant of Insurance or an Application under the Rules of Court would be preferable, particularly given that the representative plaintiff was not seeking individual remedies (one wonders why the plaintiff still wanted the hassle of a class action given this limitation. Class Proceedings Fund funding? Some residual ability to apply for a multiplier from any fund created by the declaration? The lawyer's interest was not "aired out" in the decision. I wonder if counsel should have been a bit more express about their thinking. If the only economic way to get the Plaintiff's lawyers to act was through the class action mechanism, just say so. Access to justice = finding a lawyer willing to act.).

CERTIFICATION DISMISSED AS MOOT AND FLAWEDCanadian Alliance of Pipeline Landowners' Assn. v. Enbridge Pipelines Inc., 2006 OJ 4999: The motion for certification of the class action was dismissed as moot since there was no genuine issue for trial and the defendants' motions for summary judgment were granted. The action claimed compensation or damages against the defendants for ownership rights restrictions, regulatory risk and loss of use of enjoyment of land on behalf of all landowners who had previously granted the defendant companies an easement to run a pipeline over their lands. The plaintiffs alleged they had suffered economic injury by virtue of the enactment of the National Energy Board Act and related regulations, and breach of the easements.

COSTS ORDER REVERSED IN ARABIArabi v. TD Bank, [2006] O.J. No. 5011: The court had earlier declared that costs were payable to the defendants in this mortgage pre-payment case. However the court reversed its decision after receiving further submissions from counsel and from the Law Foundation. The court stated: "There are two other factors that I must consider. The plaintiffs were, in large part, innocent of the ramifications of an exposure to costs. Mr. Farah solicited them and to visit upon them the costs of this enormously expensive litigation would be unjust. Second, it is now settled that a class proceeding is different from other proceedings and it brings special considerations that influence the disposition of costs.... Mr. Hutchison, who asked that there are no costs, pointed out that the presence or absence of the Law Foundation should not influence this disposition of costs. In their factum Mr. Baert and Ms. Waddell have reviewed the jurisprudence on costs in class proceedings in detail. There are considerations of the chilling effect that would occur to otherwise deserving litigants if an award of costs was made against the plaintiffs"

SETTLEMENT ADMINISTRATION CONSIDERED IN HEP C CLASS ACTIONEndean v. Canadian Red Cross Society, S.C., Pitfield J., Doc. 2006 BCSC 1496: An application was brought by British Columbia Fund Counsel seeking amendments to the tariff which governed the reimbursement of expenses and fees in appeal proceedings before a referee or arbitrator. The application was dismissed. The court was not prepared to accede to Fund Counsel's proposition that a referee or arbitrator should decide whether any particular appeal warranted the appointment of counsel to act at the expense of the Fund on a claimant's behalf. Such a decision had to remain within the general supervisory power of the courts, as conferred upon them by the settlement documentation.MICROSOFT CASE SURVIVESPro-Sys Consultants Ltd. v. Microsoft Corporation, 2006 BCSC 1738: The plaintiffs had purchased personal computers containing pre-installed Microsoft operating systems and software applications. They alleged that they paid artificially inflated prices for the operating systems and applications as a result of unlawful and anti-competitive acts of Microsoft. On an earlier application brought by the defendants, the court ordered certain portions of the statement of claim be struck out, but gave leave to amend. This decision dealt with the proposed amendments. The application was allowed in part. The court held that it is not plain and obvious that conduct which is illegal in the jurisdiction in which it occurred cannot constitute the element of illegal or unlawful means or unlawful conduct for the purposes of the torts of interference with economic relations and civil conspiracy. However, the statement of claim, as proposed to be amended, did not contain a pleading that the alleged illegal conduct of the defendants took place in the United States or the European Union. Such a pleading was necessary to potentially support the claims that the defendants committed those torts. Further, it was also not plain and obvious that the plea that Microsoft acted contrary to its corporate policy could not qualify under the broader view of illegal or unlawful means or unlawful conduct as discussed and applied in the authorities. However, it was plain and obvious that the plaintiffs could not rely on the plea relating to Microsoft’s articles of incorporation. The statement in the articles was simply expressing the capacity of Microsoft to carry on business.

DEDUCTIBLES CASE DEAD?McNaughton Automotive Ltd. v. Co-operators General Insurance, 2006 OJ 5234: Readers will recall that the Ontario Court of Appeal flipped the earlier McNaughton decision and dismissed cases brought against a number of other insurance companies. The remaining question was what effect this "reversal of fortune" had on the McNaughton case itself. The defendant sought to overturn certification on the ground that there was no cause of action. The Divisional Court held that members of the class could not rely on issue estoppel to prevent such an argument succeeding, even though the proposed rep plaintiff had already won his case on the merits:"Under the Class Proceedings Act, an individual does not become a member of the class until after certification and the termination of the opt-out period...Indeed, while a class member will be bound by an order or judgment that meets the requirements set out in the Act to bind a class, such person does not necessarily have the status of a party to the litigation (see, for example, the appeal provision in s. 30, differentiating parties and class members, or the discovery provisions in s. 15). In this case, there had been no decision on certification at the time of the McNaughton decision by the Court of Appeal, so putative class members could not be considered parties....Even if the proposed class members were privies of McNaughton, this is a case where it is appropriate to exercise the discretion not to apply issue estoppel because of the intervening change in the law with the Polowin decision. "On the plaintiff's suggestion that the defendant was engaged in an abuse of process given their failure to raise legislative history on the earlier merits motion, the Court stated: "While the Court of Appeal in Polowin did make reference to the legislative history before it, I am not satisfied that the legislative history was "critical" to its decision to overturn McNaughton, as the respondent submits. Rather, legislative history was the ninth of nine indicators that the Court of Appeal considered in determining whether the earlier interpretation was correct...Co-operators’s reliance on Polowin in this appeal is not an abuse of process."I would have thought that must be the last gasp of this litigation, but I have been wrong before. There are always appeals!

INDEMNITY AGREEMENTS NOT ILLEGALHolmes v. London Life Insurance Co. (Macdonald J.) [2007] O.J. No. 158: The court had previously granted carriage to one of two competing actions on the basis that the "losing action" had suffered long delays and had an "unfocussed approach": 2006 OJ 5275 . As part of that hearing, an issue had arisen about the existence of an indemnification proceeding. After reviewing the agreement and considering the legality, the court stated in subsequent reasons: "Such indemnification agreements are now part of the landscape in class proceedings. Their existence is a response to the unique nature of class proceedings which are usually long and complex requiring large amounts of legal time. The reality is that most representative plaintiffs have no capacity to meet even the smallest amounts of legal fees [*2] and disbursements before settlement on other resolution of a class action. The result is that the jurisprudence must and has evolved to meet these considerations. This is the main reason why I remarked that I saw no illegality in the Indemnification Agreement."

INTERVENTION IN HOFFMAN DISALLOWEDHoffman v. Monsanto Canada Inc., 2006 SKCA 132: This was an application by the Saskatchewan Environmental Society and Friends of the Earth Canada under Rule 17 for leave to intervene in a pending appeal from an order that denied class action status. The application was denied on the basis that the appeal was focused not on the subject matter of the action but rather simply on procedural issues arising from the Class Actions Act and its requirements. Further, the position put forward by the applicants was already represented and protected by Hoffman and others. These parties had able counsel to present their case on appeal as fully and ably as anyone could. Therefore, there was nothing the applicants could usefully contribute to the resolution of the issues on appeal.

INTERIM DISBURSEMENTS REQUESTEDDenis v. Bertrand & Frère Construction Co. Ltd. [2006] O.J. No. 4765: This was a motion by the Plaintiffs for an order requiring the Defendants to pay to the Plaintiffs interim disbursements. The position of the Plaintiffs was that they have exhausted their financial resources in this proceeding and were unable to proceed further. The Class Proceeding Committee had turned them down. The Defendants had offered, as an act of good faith and in the interests of moving these proceedings forward, on a without prejudice basis, a further $80,000 to assist the Plaintiffs' experts in their analysis of the Defendants' experts' reports. The court held that given that liability had already been determined and quantum was at least $ 8 million based on the Defendants' own estimates, a further order should be made. The court awarded $855,000.

JURISDICTION CONSIDERED IN INTERNET CLAIMDesjean v. Intermix Media, Inc. 2006 F.C. 1395: This was a motion by the defendant Intermix Media for dismissal of action on basis that claim was frivolous or that court had no jurisdiction to hear action allowed. The court agreed that it lacked jurisdiction to hear the claim. The plaintiff alleged Intermix breached the Competition Act by bundling spyware with free software that it offered on Internet websites without disclosing bundling of such spyware to consumers. Intermix was US company with no offices or employees in Canada. The court noted that Intermix had in no way availed itself of Canadian laws as it did not do any business in Canada through Website at issue. The court also found that any alleged false representations, if made, were made by Intermix in the US, hosted by a server situated in US and thus not within the Court's jurisdiction. The court stated that even if court could assume jurisdiction, US would be better forum for claim.PAY DAY LOAN UPDATESmith v. National Moneymart, 2007 OJ 46: Class action certified against National Money Mart Company. The court rejected the constitutional argument that s.347 created an absolute liability offence.Joseph v. Quik Payday (unreported 05-CV-283048-CP, December 1, 2006): A settlement was approved in this payday loan case. It was settled on the basis that the company coughed up all the money in their bank account, and forgave all outstanding loans. The company was no longer doing business, which simplified matters. The company did not retain a reversionary right in the settlement sum, but rather any unclaimed money would be given to a credit counselling organization.POULIN v. FORD, [2006] O.J. No. 4625In our last reported we neglected in our haste to note on the most interesting feature of this case, being the discussion of the role of a U.S. law firm. The court summarized the relationship as follows:"One of the requirements to be found in a representative plaintiff who can fairly and adequately represent the interests of the class is that the representative plaintiff must have competent counsel. In this context, competent counsel entails the court having supervisory jurisdiction over lawyers who seek to represent the interests of litigants.As noted above, the plaintiff's Canadian counsel have entered into an arrangement described as a "co-counsel association agreement" with the U.S. law firm, Motley, Rice, to prosecute the action as a class proceeding. This agreement provides, among other terms, for Motley Rice to supply "litigation support" and "guidance" and to fund the litigation costs herein. The nature of the "litigation support" and "guidance" is such that Canadian counsel must obtain the prior consent of Motley, Rice before incurring and paying any disbursement exceeding $2,500. In addition, there is provision for a fees split between Canadian counsel and Motley, Rice after reimbursement of all litigation expenses incurred by Motley, Rice. The fees allocation is 70% to Canadian counsel and 30% to Motley, Rice.The defendants submit these terms in the co-counsel association agreement indicate that Canadian counsel are improperly splitting fees with non-lawyers for Ontario purposes; as well, there is the potential to conclude that the American lawyers, and in particular, Mr. Jekel, are practicing law in Ontario contrary to s. 50 of the Law Society Act and s. 1 of the Solicitors' Act....In Wilson v. Servier, the court recognized the contribution of U.S. counsel to Canadian counsel by making an award of costs that reflected the time and disbursements rendered by U.S. counsel to the Canadian counsel. However, U.S. counsel in Wilson v. Servier acted as consultants, billing Canadian counsel for the time and disbursements spent on behalf of the representative plaintiff and the class members. There is no indication that the U.S. counsel in Wilson v. Servier essentially underwrote the entire litigation costs and was sharing in the fees on a percentage basis, as in the present case. In sum, U.S. counsel in Wilson v. Servier were acting as consultants whereas U.S. counsel in this case are acting more as underwriters for the litigation. This latter fact becomes particularly poignant in terms of the capacity of the representative plaintiff to bear any costs that could be ordered against the representative plaintiff. The plaintiff acknowledged in the course of his Rule 39.03 examination that his retainer agreement with Canadian counsel did not provide for any indemnity to him with respect to costs. Although this would in the ordinary course be considered a matter between a litigant and his or her counsel, subject to either judicial or regulatory oversight as the case may be, it is a significant matter in the context of the plaintiff's capacity to be a representative plaintiff for a class proceeding. "The court did not make any decision that the relationship was improper preferring to rely on the absence of a proper litigation plan. The court stated:"Having regard to his general lack of understanding or awareness of the primary evidence, i.e. the Jekel affidavit, in support of the certification motion; his lack of any input to or even review of, the Jekel affidavit; his unawareness of what constitutes a litigation plan is or of what the financial arrangements are between his Canadian counsel and Motley, Rice, I have serious reservations as to whether the plaintiff has capacity to properly instruct counsel on behalf of the members of the putative class.Although these reservations militate against concluding that the plaintiff can fairly and adequately represent the interests of the proposed class, this issue cannot be decided without ascertaining whether the plaintiff has discharged his most important evidentiary burden, that is, producing a workable plan to advance the claims on behalf of the class...A helpful checklist or guide for the requirements of a proper litigation plan in a class proceeding is set out in a paper published in Law Society of Upper Canada, Special Lectures, 2003, entitled Issues of Evidence in a Class Action: An Introduction and Overview, by Mr. Justice Winkler and Mr. Strosberg. According to the authors, the points to be covered in a proper litigation plan are as follows:* the manner in which class members will be identified if not known already;* the particulars of the notice program, including a sample notice and how and where the notice will be published and made available to the public;* how those who choose to opt out will be dealt with;* the scheduling of times for delivery of such things as statements of defence, productions, delivery of expert reports and trial date;* the method of communication with the class;* the possibility of settlement;* what will happen if the common issues are decided in favour of the class;* the method for valuation of damages;* the details of the process for distribution of the damage award;* the use of claims forms or other procedures for the distribution;* what will happen to any surplus funds;* how insufficient funds will be dealt with; and* how the individual issues will be dealt with - (pages 74-5).The proffered litigation plan (plan of proceeding) undoubtedly addresses some of the points in the above checklist. Ford, however, makes the following criticisms of the proffered litigation plan:(1) The plan of proceeding does not contain any information in the proposed notification system enabling members of the class to opt out of the class proceeding if they wish to commence individual lawsuits(2) The plan of proceeding does not indicate who would pay costs associated with the notification program.(3) There is no methodology in the plan of proceeding dealing with any extra-provincial members of the class.(4) There is no identification in the plan of proceeding as to investigations that have been conducted to date or will be necessary in the future.(5) The plan of proceeding does not seek to separate common issues from individual issues or to anticipate claims of any potential sub-classes.(6) The plan fails to plan for steps following a common issues trial, including the determination of any individual issues in the distribution of damages.(7) The plan or proceeding does not set out the manner in which the defendants' costs will be paid in the event the plaintiff is unsuccessful.Although other criticisms by the defendants of the plan of proceedings such as unrealistically short timelines for the delivery of statements of defence, productions, delivery of expert reports and setting the trial date may be susceptible of amendment, the criticisms by Ford set out in para. 100, above, are substantive and strike at the very core of the proposed litigation plan."DISABILITY CLASS ACTION DISMISSEDA.L. v. Ontario, 2006 OJ 4673: This lawsuit alleged that as a result of the government's negligence, families were forced to personally fund services for their severely disabled children, and in some cases, relinquish custody to the government in order to obtain life-saving procedures. The court held that the negligence claim was at odds with the legal relationship between the parties that was created by statute. One did not commit a tort by refusing to enter into a contract. The respondents' negligence claim rested on the argument that the Act imposed a duty of care, yet the Act contemplated a voluntary agreement. Tort claims rested upon legally imposed duties; contractual obligations depended upon the mutual consent of the parties. The statutory discretion conferred by s. 30 permitted, but did not require, a voluntary agreement.

CONTEMPT ORDER UPHELDMilligan v. Lech, 2006 OJ 4700: The defendant in this certified class action sought to overturn certain contempt orders issued against him for non-compliance with earlier court orders.

ORDER ON APPLICATION TO AMEND UPHELDC.H.S. v. Alberta (Director of Child Welfare), 2006 ABCA 355: The plaintiff's application to amend his statement of claim had been dismissed. The plaintiff's appeal was also dismissed. The author is co-counsel for the Province in this matter.

APPLICATION TO EXAMINE REFUSEDTanguay v. Hydro-Quebec, 2006 QCCS 2594: In proposed class action by employees of respondent Hydro-Quebec, the respondent applied for leave to examine three individuals including the proposed representative plaintiff, with view to preparing its limitation defence of prescription and to obtain information regarding classes or sub-classes of claimants. The court noted that there was no absolute right to discovery prior to a certification application in proposed class action. The court held that limitations should be left to the merits, assuming certification was granted. The motion was dismissed.